Service tax rate to rise from 15 pc to 18 pc under GST: Hasmukh Adhia

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New Delhi : Services sector is likely to attract a higher tax rate of 18 per cent from the current 15 per cent under the Goods and Services Tax (GST) regime, thus making services "slightly" more expensive, Revenue Secretary Hasmukh Adhia has said.


"Yes, for the services sector the standard rate may move to 18 per cent," Adhia told.

However, those exempted at present -- like healthcare, education and agriculture -- are likely to remain so.

"Whatever is in the present exempt list, we will try to continue it. We would recommend this to the Council and it will take a view on it. Most probably they should agree. Our attempt is not to upset too many things in one go," he said.

At present, the services sector is taxed at 14 per cent with two additional cesses -- Swachh Bharat Cess and the Krishi Kalyan Cess attracting half a per cent each -- taking the burden to 15 per cent.

However, those who earn less than Rs 20 lakh a year will not have to register under the GST or pay any service tax, Adhia clarified later. At present, service tax has to be paid if the income is above Rs 10 lakh.

The GST law also says that agriculturalists -- who employ themselves or their family members -- will not come under GST even if their turnover is over Rs 20 lakh annually. Those who are employing persons and have a turnover of over Rs 20 lakh a year will have to register under the GST.

Currently, sericulture, floriculture, dairy, horticulture, fishing that usually employ outside labourers on a large scale are exempt from service tax as they come under agriculture. But whether these will attract tax under GST is still debatable.

"Those who are dealing in anything except what we have defined as 'agriculturalist' will have to register (under GST). But whether their products are taxable or not will have to be decided by the Council," he said.

"We have not yet decided on the exemption list. That will be decided separately by the Council, I don't think it will want to tax many agriculture products," Adhia told IANS.

 He also said that some services which currently have less than 15 per cent tax rate may attract lower rates.